What are Annuity Rates?
by admin on 14/04/09 at 6:56 am
Annuity rates are payments that are made by a company, like an insurance company, to someone who is an annuity holder, over a period of time. These payments have a rate of return, known as annuity rates that are dependent on the type of annuity.
If you have a fixed deferred annuity, the annuity rate is guaranteed for the entire period of the insurance contract. Variable deferred annuities do not have a guaranteed return. This difference is because the amount that the insurance company gets from the fixed deferred annuity is invested in low risk securities that have a confirmed income, whereas the variable deferred annuity amount is invested in high risk investments without any guarantee of payment. However, any excess income that you get from the variable annuity above the premium cannot be taxed, making this a huge advantage.
The two factors that will have an impact on the annuity rates are gilt yields and life expectancy. In most countries, annuity rates are going down, as they are dependent on the monetary policy and the market conditions.
Everyone wants a high annuity rate, but in order to get a higher rate you will need to look around before you choose an insurance company.
